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Current-year biodiesel RINs hit three-year low amid selloff

Highlights

Current-year biodiesel RINs were assessed at their lowest level in more than three years Monday amid heavy selling and ample supply, sources said.

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The tumbling prices also dragged current-year ethanol and advanced biofuel RINs assessments to their lowest levels in at least nine months.

Current-year biomass-based diesel (D4) RINs plunged 9 cents to $0.30/RIN, corn-based ethanol (D6) RINs were assessed 0.5 cent lower at $0.22/RIN, and advanced biofuel (D5) RINs dropped 3 cents to $0.31/RIN, a Platts record low.


Current-year ethanol RINs were assessed at their lowest level since January 28, and biodiesel RINs were at their lowest since June 18, 2010.

Although US Environmental Protection Agency data released last week showed US biomass-based diesel September RINs production 7.07% lower at 255.91 million gal from August's record high, total domestic biodiesel RINs production had accounted for 94.01% of the EPA's targeted mandate, three-fourths the way through the year.

In continued reaction to that data, current-year biodiesel RINs were heard traded as low as $0.28/RIN before bid-offer levels began to rebound.

"I think it was mostly the heavy selling in [biodiesel RINs] that pushed [ethanol RINs] lower," one biofuels RINs broker said. "Then [ethanol RINs] buying pushed up the market."

Current-year ethanol RINs were heard traded first at $0.2150/RIN before falling as low as $0.18/RIN and later rebounding to last trade at $0.22/RIN.

"Today, one guy who likes to swing big hit the 'sell' button," one trader said. "Then, another guy who likes to swing big hit the 'buy' button."

Current-year ethanol RINs assessments have slumped for 11 of the last 13 sessions as traders await the EPA's release of its proposed 2014 RFS blending requirements.

The proposal has been under review from the White House's Office of Management and Budget since August 30.

RINs prices soared for much of 2013 on aggressive buying ahead of the pending "blend wall." The term describes when the maximum amount of the US gasoline pool has been blended with 10% ethanol. Refiners will then be under pressure to run higher ethanol blends or buy RINs, unless Congress is pressured to alter the RFS.

The four-week rolling average of the ethanol blending rate was at 9.70% for the week ended Friday, which was 0.3 percentage point away from the 10% "blend wall," EPA data showed last week.

The EPA issues a RIN to track renewable fuel usage throughout the supply chain. Refiners, importers and blenders -- called "obligated parties" -- use them to show the EPA that they have fulfilled their government-mandated use of renewable fuels. If the obligated party has not used enough physical product, it can buy RINs to satisfy the quota.

--Jordan Godwin, jordan.godwin@platts.com
--Edited by Kevin Saville, kevin.saville@platts.com